Financial records are notorious for being messy. Bills, paycheck stubs, tax returns and bank statements have a way of getting tucked into random places. Luckily, there are a few pretty painless ways to organize your important documents.
Put all your financial records in one dedicated spot
To ensure that bills are paid on time, bank statements are reconciled and important documents are properly filed, set aside a specific location in your home for financial tasks. It may be a place where you keep a computer or filing cabinets. Once that area’s set aside, pick a time each week to pay bills, enter financial information into check registers and organize documents.
Organize in a way that makes sense to you
Many people use a computer program to track everyday spending and bank accounts. Others use a pencil and paper. The key is to use whatever system makes sense to you and helps you maintain your finances with a reasonable amount of effort.
Protect the important stuff
Don’t leave your only copies of wills, tax returns, stock certificates or emergency contacts in a pile on the desk. Such documents should be put in a safe deposit box or home safe. Ask your attorney or financial advisor to store the signed copy of your will in a secure location.
Get rid of the documents you don’t need anymore
Many papers (such as regular household bills) can be shredded soon after receipt. Other documents, such as those supporting the cost of investments and real estate, should be retained longer for tax purposes. A general rule for tax returns (and documents that support the returns) is seven years. When it’s time to discard those old pieces of paper, fire up the shredder.
Everyone loves a free meal – especially employees. However, your business tax return will be affected differently depending on the circumstances of the mealtime experience.
The difference between your tax bracket and your tax rate is more than a trick question. For example, knowing your tax rate gives you an accurate reflection of your tax liability in relation to your total income. Knowing your tax bracket is useful for planning purposes. For instance, you may want to spread a Roth conversion over several years in order to stay within the income limits of a particular tax bracket.
You may not have thought much about the alternative minimum tax, or AMT, since Congress passed a law that permanently fixed the exemption. But the tax, which you calculate separately from your regular tax liability, is still around. Here’s how the AMT might apply to your 2016 tax return.